Notice & Comment

International Factors in Domestic Regulation: What the District Court Got Wrong in Louisiana v. Biden, by Elena Chachko

Can agencies consider international factors when they regulate domestically absent explicit statutory authorization? A case now before the Fifth Circuit raises precisely this question. In Louisiana v. Bidenyet another environmental policy case—ten states seek to undo one of President Biden’s key climate change regulatory initiatives. The Louisiana district court concluded that considerations related to global regulatory impact were out of bounds. There are good reasons to argue that conclusion was wrong.

Biden’s Climate Order and the District Court’s Ruling

In January 2021, President Biden issued Executive Order 13990 on “Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis”. Section 5 of the Executive Order provides that

It is essential that agencies capture the full costs of greenhouse gas emissions as accurately as possible, including by taking global damages into account. Doing so facilitates sound decision-making, recognizes the breadth of climate impacts, and supports the international leadership of the United States on climate issues.

The Order instructs agencies to weigh global impact when they conduct cost-benefit analysis of new regulations and other actions that impact greenhouse gas emissions. It provides a concrete mechanism for doing so. The Order reinstated the Obama-era Interagency Working Group on Social Costs of Greenhouse Gas Emissions and directed it to publish numerical estimates of the social costs of three major types of emissions for agencies to use.

Ten states challenged the Order and the interim social cost estimates that the Working Group had produced. Among other claims, they argue that the administration exceeded its authority by “basing regulatory policy upon global considerations”. The U.S. District Court for the Western District of Louisiana granted the plaintiffs’ motion for preliminary injunction in its entirety. It enjoined the Biden administration from relying on the Working Groups’ interim estimates or any similar methodology that considers global regulatory effects. Not only that—the Court enjoined the administration from relying on section 5 of Executive Order 13990 in any way. The administration promptly appealed, highlighting jurisdictional claims. It also asserts that the injunction threatens to derail rulemakings in several agencies, and that it unduly encroaches on the President’s authority to supervise policymaking within the executive branch.

The district court’s ruling has lots of puzzling elements. It granted broad injunctive relief although the plaintiffs challenged the Executive Order’s general guidance to agencies and the Working Group’s interim estimates, not specific final administrative action incorporating them. In Missouri v. Biden, now before the Court of Appeals for the 8th Circuit, the district court dismissed a similar case on standing and ripeness grounds. Furthermore, the decision refers in several places to “the separation of powers clause of the United States Constitution” and misapplies Justice Jackson’s concurrence in Youngstown Sheet & Tube Company v. Sawyer. It also follows in the footsteps of the Supreme Court’s recent effort to breathe new life into the “major questions” doctrine. The doctrine requires that congress speak clearly when it delegates to agencies “powers of vast economic or political significance”. In this case, the Court appeared to extend the doctrine even further to bar the president from issuing an executive order, although the president, unlike administrative agencies, is not a creature of statute. It concluded that the president lacks authority to issue policy guidance to agencies—an authority that presidents have long exercised in ways similar to the Executive Order at issue here.

Here I focus on a different aspect of the case. The case brings into focus a question that has remained on the sidelines of the debate about the limits of agency power: under what conditions can an agency rely on international considerations such as foreign policy and global regulatory impact, various forms of international law or advancing global regulatory cooperation through soft law when it formulates domestic regulation? The question is important because international factors are vast and important sources of context, information, standards, and rules that agencies can and do draw on when they regulate domestically. Can agencies consider international factors even in the absence of clear congressional authorization?

In ongoing work with Jack Goldsmith, we study the law and practice of agency reliance on international factors. Our project involves a large-scale empirical study of agency practice in this area since the early 2000s, as well as an exhaustive analysis of the case law on this issue. Our research indicates that the Louisiana District Court’s conclusion on this point is plainly wrong. The weight of the case law suggests that an agency may consider policy-relevant international factors unless they are explicitly prohibited by statue. What is more, the combination of general administrative law doctrine that governs judicial review of agency exercise of policy discretion and foreign relations law doctrines puts a thumb on the scale in favor of agency consideration of international factors.

The Basic Rule and International Factors

Under section 706(2)(A) of the Administrative Procedure Act, a reviewing court shall “hold unlawful and set aside agency action” that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” The Supreme Court in State Farm famously explained that a court exercising such review “must ‘consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.’” The Court advised that the agency must consider all factors relevant to the problem they seek to regulate, but must not consider factors “Congress has not intended [them] to consider.”

The question of what factors agencies are allowed to consider under State Farm is, in the main, a question of statutory interpretation. If a statute clearly prohibits an agency from considering an international factor, it may not do so. If a statute clearly requires or permits an agency to consider such a factor, the agency can (or must) do so. If a statute is silent or ambiguous as to what factors an agency can consider, Chevron deference generally extends to an agency’s reasonable interpretation of the appropriate factors to consider under the statute. Put another way, agencies can consider any policy-relevant factor that they want absent a statutory prohibition. We call this the basic rule about permissible factors for regulation.

The Supreme Court has never elaborated how international factors might alter or affect the basic rule. Dicta in a recent decision suggest that the basic rule should apply straightforwardly to international factors, including ones that are informed by politics. In Dep’t of Commerce v. New York, the Court set aside the Secretary of Commerce’s decision to add a citizenship question to the census ahead of the 2020 presidential elections. The Court invalidated the decision on the ground that it rested on a pretextual basis and remanded to the agency. But Chief Justice Roberts’ opinion for the Court recognized that agency policy decisions “are routinely informed by unstated considerations of politics, the legislative process, public relations, interest group relations, foreign relations, and national security concerns (among others).”

In contrast to this recent decision, Massachusetts v. EPA, decided in 2007,prohibited the EPA from relying on international considerations in refusing to regulate emissions from new motor vehicles under section 202(a)(1) of the Clean Air Act. The statute was silent on this point, but the Court nevertheless found that it did not authorize the agency to consider foreign policy. Writing for the majority, Justice Stevens reasoned that “[w]hile the President has broad authority in foreign affairs, that authority does not extend to the refusal to execute domestic laws.” The Court invoked neither State Farm nor Chevron in this part of its analysis.

In dissent, Justice Scalia argued that the statute was silent about the conditions under which the EPA could decline to form a judgment, and that the proffered policy reasons for doing so were permissible. “The reasons the EPA gave are surely considerations executive agencies regularly take into account (and ought to take into account) when deciding whether to consider entering a new field: the impact such entry would have on other Executive Branch programs and on foreign policy. There is no basis in law for the Court’s imposed limitation”, he asserted. In other words, Scalia saw the case as governed by the basic rule, and believed that the majority departed from the basic rule.

Many scholars agree that Massachusetts v. EPA departed from the basic rule. The decision on this point has been widely distinguished and has not resulted in curtailment of the basic rule. And indeed, there are good reasons to argue—contra Massachusetts v. EPA—that the basic rule might countenance even broader agency discretion to consider international factors than non-international ones.

Why Agencies Might Have Even Greater Leeway to Consider International Factors

Under the basic rule, Chevron deference applies to an agency’s reasonable interpretation of the factors to consider under the relevant statute. This deference might be heightened when international factors are at play. 

First, Courts give the executive branch special deference, independent of Chevron, in many foreign relations contexts. Chevron deference may be heightened because agency foreign affairs action often involves the president. Louisiana is a case in point. The challenged administrative actions implemented an executive order that outlines the foreign policy priorities of the United States regarding climate change. The President (and his delegates) have significant independent lawmaking power and special fact-finding expertise related to foreign affairs. His guidance to agencies in this area therefore carries substantial weight even absent specific congressional authorization.

Second, courts have traditionally interpreted congressional delegations of power to the executive broadly when it comes to foreign affairs. Even Justice Gorsuch, who has advocated for a robust non-delegation doctrine, would still allow broad delegations to the executive in foreign-affairs related matters. 

Third, when the international factor that the agency considers is a form of binding international law, the Chevron analysis intersects with a canon of construction specific to international law. The Charming Betsy canon instructs the courts to construe statutes, whenever possible, in a manner that will not require the United States to violate “the law of nations.” The canon provides an additional reason for a court to allow an agency to consider an international factor—conformity with international law—even if the organic statute is silent on the relevance of that factor. Though there is some disagreement on this point, the Charming Betsy canon likely applies to all forms of international law—treaties, various forms of executive agreement, and customary international law.

Agencies may have greater freedom to consider international factors not only because of heightened deference and a presumption in favor of conformity with international law in statutory interpretation, but also because judicial review under the APA may be less searching in matters that touch on foreign affairs. The APA’s Foreign Affairs and Military Functions exception exempts agencies from certain procedural requirements that generally apply to rulemaking or adjudication for actions that involve military or foreign affairs. By design, the exception is meant to enhance agency discretion in making such regulations, even though they may still be subject to arbitrary and capricious review.

What the Louisiana District Court Got Wrong

The Louisiana District Court concluded—with hardly any analysis—that the applicable statutes barred government agencies from following the Working Group’s guidance or independently considering the global impact on emissions of their proposed regulatory actions. The Court held that the statutes only permit national considerations. Yet, all the various environmental statutes that the plaintiffs cited do not prohibit international considerations explicitly. In fact, nothing in those statutes even hints at a prohibition.

One statute, The Energy Policy and Conservation Act of 1975 (EPCA), directs the executive to consider “the need for national energy and water conservation” and “the need of the United States to conserve energy”. The Clean Air Act directs the Executive “to protect and enhance the quality of the Nation’s air resources so as to promote the public health and welfare and the productive capacity of its population”. The National Environmental Policy Act (NEPA) directs agencies to “assure for all Americans safe, healthful, productive, and esthetically and culturally pleasing surroundings”. The Mineral Leasing Act (MLA) and the Outer Continental Shelf Lands Act (OCSLA), also cited by the plaintiffs, contain provisions that similarly invoke national interests.

Nothing in the text of these statutes implies that Congress intended to prohibit agencies from considering international factors. Indeed, assuring “for all Americans safe, healthful, productive, and esthetically and culturally pleasing surroundings” may well require consideration of global climate change efforts. After all, the United States is not isolated from the impact of a universal phenomenon. Global climate change directly impacts the quality of its environment. Under the basic rule, then, the agencies should be allowed to consider global impact.

Moreover, the case for allowing agencies to consider global impact here is bolstered by the President’s independent Article II foreign affairs powers. It is arguably within the president’s constitutional authority to seek to align agencies with the foreign policy objective of advancing international climate efforts, at least in the absence of a directly conflicting statute. There is an argument here for heightened foreign affairs deference beyond what Chevron may ordinarily prescribe.

This analysis is grounded in existing doctrine and precedent—with which the Louisiana ruling is clearly at odds. Our broader project engages with the normative questions that broad agency reliance on international factors in domestic regulation raises. When congressional directives are ambiguous, should administrative agencies be allowed to constantly import a wealth of international regulatory standards produced by actors that are not directly accountable to the U.S. polity? Should they act in furtherance of global interests? How heavily should domestic regulation be impacted by foreign policy considerations, and how to prevent pretextual invocation of broad and manipulable foreign policy interests? Can courts realistically curtail such practices? These questions need to be better incorporated into the broader unfolding debate about deference, non-delegation, and the scope of agency policy discretion.

Elena Chachko is the Harvard Law School Rappaport Fellow and a Fellow at the Miller Institute for Global Challenges and the Law at Berkeley Law School.

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